ANY moves to make it easier to move up the property ladder and stimulate the market would be welcomed but must be approached with caution, industry leaders had said.
Earlier this week, Housing Minister Malcolm Ferey suggested that extending an existing equity scheme to help second-time buyers could begin to address a looming deficit in the Island’s need for smaller properties.
It came after a Statistics Jersey report which found there is set to be a surplus of family homes and not enough one- and two-bedroom properties amid a trend of declining birthrates and reduced demand for larger houses over the next three years.
Deputy Ferey said “early discussions” were being had around the Council of Ministers table around the possible extension to First Step Scheme – which was a result of £10 million of government funding and provides for equity loans of up to 40% towards the property purchase.
Jersey Estate Agents’ Association president John Quemard said: “We welcome any initiative that seeks to improve movement within the Island’s housing market.
“Helping existing homeowners move up the property ladder has the potential to unlock a chain of transactions that benefits not only those purchasing larger family homes, but also first-time buyers by increasing the availability of smaller properties.
“If there is an emerging imbalance between the supply of larger family homes and demand for one- and two- bedroom properties, then encouraging greater mobility within the market is a sensible area for Government to explore.”
But he added: “The success of any extension to the existing First Step Scheme will ultimately depend on the detail.
“Consideration will need to be given to eligibility, affordability, funding, and ensuring the scheme supports genuine housing needs without creating unnecessary upward pressures on prices.
“We look forward to meeting the new Housing Minister in due course to discuss this proposal, together with other important issues affecting Jersey’s housing market.”
Meanwhile, managing director of The Mortgage Shop, Gary Tumelty, said “one of the biggest issues” he had seen over the past two years is clients stuck in one-and two-bedroom properties struggling to upsize.
He added that while for some it is because they cannot afford to, for others it is because of a lack of new entrants wanting to buy their one- or two-bedroom flats that would allow them to move.
He said: “There has been an unintended consequence of Andium developing new properties in the market with no deposit schemes that has impacted this, which will have further consequences in years to come.
“By our estimation around 25% of people that have acquired a property through this scheme that would or could have had the ability to have bought in the open market either immediately or in the near future.
“The challenges arise because the scheme needs to be tightened to ensure the correct people have access to it because there are too many that slip through, and Andium also have targets to meet and sell their stock.”
He added that a “further unintended consequence” has been the number of Islanders receiving 35-to-40-year mortgages with no deposits.
“A good proportion of clients that we have seen buy at Maison Les Arches have been aged between 25 -40 and it will take many for these clients to be able to create enough equity to be able to move to a new property,” he said.
“During that time, these people may enter relationships of have children and be trapped in one-bedroom apartments and not be able to house the families that they are creating unless those clients bring in their new partner to the mortgage and pay it down quicker but this will still take time to do that.”
